Short answer: Yes, you can contribute to both in the same year. They have separate contribution limits ($23,500 for 401k + $7,000 for IRA in 2025). Having both is not only legal — it's often the best strategy.
The Optimal Contribution Order
- 1.401(k) up to employer match: Free money — always claim first
- 2.Roth IRA up to limit ($7,000): More investment choices, tax-free growth, no RMDs
- 3.Max out 401(k) to $23,500: High limit, automatic payroll deduction, lowers taxable income
- 4.HSA if eligible ($4,300 individual / $8,550 family): Triple tax advantage — best account in existence
- 5.Taxable brokerage: No limits, fully flexible
How 401(k) Participation Affects IRA Deductibility
If you (or your spouse) participate in a 401(k), traditional IRA deductions phase out at certain income levels (2025: $79,000–$89,000 single, $126,000–$146,000 MFJ). Above those limits, you can still contribute — it's just not deductible. The workaround: contribute to traditional IRA, then convert to Roth (backdoor Roth IRA strategy).
Roth IRA Income Limits Still Apply
High earners ($165,000+ single, $246,000+ married) can't contribute directly to a Roth IRA regardless of 401(k) participation. But they can do the backdoor Roth: contribute to a non-deductible traditional IRA, then convert it to Roth. No income limit on conversions.
Even in years when you can't deduct traditional IRA contributions, keep contributing. Non-deductible IRA contributions get a stepped-up cost basis, and converting them to Roth (backdoor) is one of the most powerful tax strategies available to high earners.
The ideal combination: 401(k) to the match + Roth IRA maxed + 401(k) maxed = up to $30,500/year in tax-advantaged space in 2025. For someone 50+, that's $38,500. Use all of it if you can.